At the end of 2003, mutual funds accounted for 22% of
the $12 trillion invested in the U.S. retirement markets,
according to the Investment Company Institute’s 2004 Mutual
Fund Fact Book.
Of that amount, ICI found $1.4 trillion locked into
employer-sponsored accounts and $1.3 trillion in Individual
Retirement Accounts (IRA).

Across the IRA plain, mutual funds’ share of the
market has increased from 22% in 1990 to 43% of the roughly
$3 trillion IRA market in 2003.
With approximately 36.4 million U.S. households
holding “traditional” IRA assets as of mid-2003, that
represents a significant market for mutual fund assets.

ICI found the traditional IRA household held a median
of $30,000 in those accounts.
Of this total, 45% held IRA assets that were rolled
over from an employee retirement plan and the vast majority
(64%) of IRA holdings were mutual funds.
More than half (54%) of all mutual funds held in IRAs were
equity mutual funds, 28% were money market funds, 26% were
bond funds and 18% were hybrid funds.

In total, mutual funds were most widely held in IRA,
where they made up $1.3 trillion of the total IRA holdings
in the U.S.
Across other retirement plans, $898 billion of
401(k) assets were held in mutual funds, $260 billion of
403(b) assets were held in funds and mutual funds held $237
billion in other retirement plans.
While not as widely held, the share of mutual fund assets
in 401(k) plans grew substantially in 2003, compared to
just $140 billion of K plan assets held in funds a decade
ago.
Overall, mutual fund assets held in employer sponsored
retirement accounts total $1.4 trillion in 2003, up 28%
from the previous year, ICI found.

Defined Contributions Plans

“The most important source of mutual fund assets in
the employer-sponsored pension plan market is defined
contribution plans, especially 401(k) plans,” ICI
said.
Mutual funds’ share of the 401(k) market made up 48%
at the end of 2003, compared 19% of mutual funds in defined
contribution plans held in 403(b) schemes.

Much like IRAs, the majority of mutual fund assets
held in 401(k) plans were concentrated in equity funds
(40%) at the end of 2002, the ICI found.
Other allocations were directed toward:

Company stock (16%)

GIC/Stable Value funds (16%)

Bond funds (11%)

Balanced funds (9%)

Money funds (6%)

Other (2%).

Examining plan balances at the end of 2002, ICI found
the average 401(k) account balance, excluding plan loans,
was $39,885.
Not surprising was the finding that workers in their
sixties with at least 30 years of job tenure held the
highest 401(k) balances ($146,211).

529 Coverage

It is in 529 college savings plans that mutual funds
are far-and-away the investment of choice, making up 97% of
the $35.1 billion invested in 529 plans at the end of
2003.
This is even more significant when compared to the
growth of 529 plans of the last year, with savings spike
ahead of the $18.5 billion in these plans at the end of
2002.
Further the number of accounts rose to more than four
million and the average account size was approximately
$8,200, ICI said.

A copy of the complete 189-page 2004 Mutual Fund Fact
Book can be downloaded at
http://www.ici.org/pdf/2004_factbook.pdf
.
Aside from statistics on mutual funds held in
retirement accounts, the Fact Book also includes
information on the regulation and taxation of mutual funds,
how the fund industry is structured and economic
developments in U.S. funds in 2003.